Microsoft Buys Skype Phone Service

Microsoft has confirmed that it will buy off Internet phone service provider Skype for $8.5bn in cash. This deal will be the largest ever acquisition for Microsoft, who are looking for all means to extend their network platform, but ironically have not bought any company in the past 5 years. Skype, founded in 2003, is based in Luxembourg, and has 663mn users worldwide, It is currently owned by eBay and a few other private investors. Though, even with its wide user-base, Skype has not been able to churn out profits, and in the year 2010, their revenue was $860mn, with a net loss of around $7mn. This is something Microsoft will look to turn around, along with integrating it within itself to better its own services worldwide. (read: how does Skype work)

Steve Ballmer, Chief Executive of Microsoft said, "Skype is a phenomenal service that is loved by millions of people around the world. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world. By bringing together the best of Microsoft and the best of Skype, we will empower people around the world with new technologies that should bring them closer together." Tony Bates, Chief Executive of Skype will still be leading Microsoft's new division of Skype, and will be reporting to Steve Ballmer. Microsoft's press release read, "The combination will extend Skype's world-class brand and the reach of its networked platform, while enhancing Microsoft's existing portfolio of real-time communications products and services. With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections among friends, families and business colleagues globally."

At a news conference in San Francisco, Ballmer announced the mega deal, and emphasized that this would facilitate in bringing forward advanced technology to a wider audience. Presently, calls made from Skype to Skype users are free, while calls from Skype to landline or mobile users are charged. Plans are to enable video chatting between Microsoft's Xbox users, audio calls for Microsoft's Outlook email program, and a conferencing facility through all Windows phones. With this, Microsoft can perhaps expect to gain a competitive edge over Google and Apple products in the near future.